Budding Industry: Marijuana’s Impact in Colorado

This month marks the fifth anniversary of the passage of Amendment 64, which legalized recreational marijuana for adult use in the Centennial State. Here’s a holistic look at where Colorado’s burgeoning cannabis scene is, five years in—and where it might be headed.

The Status of Cannabis

We take the pulse of the pot industry five years after Coloradans legalized the drug.

The same night President Barack Obama eked out his 2012 re-election bid with 51 percent of the popular vote, cannabis won its campaign in Colorado by a margin of 55 to 45. Four years later, amid one of the most divisive presidential elections in modern history, eight of nine pro-marijuana initiatives proposed across the country passed. Today, eight states (plus the District of Columbia) have legalized marijuana for recreational use, and 29 allow it for medical purposes.

“Cannabis was more popular than Hillary or Trump,” says Adam Orens, founding partner of the Marijuana Policy Group, an economic and business consulting firm that contracts with the state of Colorado. “In a divided nation, we’re agreeing on cannabis.”

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429: Retail marijuana store licenses in Denver as of January 1, 2017

That’s a marked contrast to the vicious debates over Amendment 64 in 2012. Among the arguments: whether crime and underage use would spike and if the state would really see a huge financial benefit from marijuana tax revenue. A few years in, legalization doesn’t appear to have had a massive impact on criminal activity or on use by minors. Marijuana-related crimes accounted for just more than half a percent of all crime in Denver in 2012 and 2013 and less than half a percent in 2014 and 2015, with the most common marijuana-related crime being burglary or attempted burglary. Out-of-state trafficking is still a significant concern, though, according to Denver Police Department Commander James Henning, head of DPD’s Investigative Support Division, which handles much of the city’s marijuana-related crime. Teen use rates also have not risen dramatically—about one percent—but the under-18 set does appear to be changing the way it views the drug. And although the state collected nearly $200 million in revenue last year from marijuana, that’s still only about one percent of the state budget. So it seems proponents and opponents were both a little bit right—and maybe a little bit wrong, too.

The reality five years into this experiment is that barring federal intervention, marijuana appears here to stay in Colorado, providing residents a front-row seat to the fascinating process of an industry being born. In the following, we examine just what that means: from the businesses that have sprung up to support this nascent market to the state agencies tasked with regulating it to the language insiders use to describe a drug that has too many synonyms to count. What we can count are the ways cannabis has changed life in the Mile High City—some good, some bad, some too early to call. Our take? To borrow a bit of phrasing from the cannabist in chief (that’d be Jimmy Buffet): “Some of it’s magic, some of it’s tragic,” but it’s been a pretty good—albeit bumpy—ride along the way.

Photo by Jason Connolly / AFP / Getty Images

Defining Terms: Call cannabis whatever you want—marijuana, weed, pot, kush, wacky tobacky (actually, please, not that)—but these are the terms grown-ups use to talk about the industry.

Cannabis: The plant genus that includes all varietals, including hemp, and is the preferred industry term. Weed and pot—and almost any other colloquialism—come with their own associations, typically of the Dorito-munching stoner variety.

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Flower, aka, “bud.” Photo by Benjamin Rasmussen.

Cole Memo: The 2013 memo from then Deputy Attorney General James Cole that essentially informed states with legalized marijuana laws that the Department of Justice would not make it a priority to enforce the Controlled Substances Act, provided the states demonstrate robust and effective regulatory and enforcement systems that control marijuana cultivation and distribution.

Extraction: The process of removing desired cannabis components—such as THC and cannabidiol (a nonpsychoactive chemical with reported health benefits). These are used to create concentrates or oils that can be consumed on their own or infused into other products.

Flower: Aka “bud,” the cured plant as opposed to concentrates or edibles.

FinCEN: Short for the Treasury’s Financial Crimes Enforcement Network. In 2014, FinCEN provided written guidance to the marijuana and banking industries laying out stringent regulations and monitoring processes that, if followed, would make it feasible for financial institutions to accept marijuana businesses as clients without fear of prosecution by the feds.

Marijuana Enforcement Division: The branch nested within the state’s Department of Revenue that oversees all licensing and compliance matters for medical and retail growers, manufacturers, infusers, retailers, testing labs, transportation, security companies, and soon, research and design.

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Didn’t See That Coming

In many ways, Colorado planned well for the introduction of legal adult-use cannabis. But short of using a crystal ball, few could have foreseen with certainty these unexpected impacts.

1: Industrial real estate prices soar. As the demand for space for indoor grows, well, grew in Denver, so did industrial real estate prices—from about $40 per square foot in 2014 to more than $80 in 2015. Between 2010 and 2015, rental rates also jumped by about $2 per square foot. That’s good news for Colorado’s economy and for landlords who are able to charge a premium for the spaces. But the folks living in neighborhoods with a high concentration of warehouses—like those in north Denver and off of Santa Fe Drive—had to deal with an increase in pot’s skunky smell. The city has tried to address this by capping the number of indoor cultivations and retail stores it will allow (that figure is still TBD) and by imposing stricter zoning and odor regulations.

2: More houses go up in flames. As anyone with moonshining relatives might tell you, we shouldn’t be shocked by the number of people attempting illicit at-home hash oil extractions—but the spike in residential fires as a result of these experiments still surprised the Denver Fire Department. In the first year of recreational legalization, it responded to 30 home fires related to DIY extractions. On the positive side, as a result of these kinds of incidents—and concerns over the noxious chemicals and pesticides first responders were finding at grows—cooperation in city government hit an all-time high. The city established the Marijuana Advisory Council, a cross-departmental group that works to resolve marijuana-related issues in Denver. “All the agencies were forced early on to start talking to each other,” says Denver Police Department Commander James Henning, “and we’ve built on those relationships because we all have a stake in this.”

3: The edible explosion. While weed-infused gummies, pot-laced cookies, and marijuana sodas made up only about six percent of the medical marijuana market in 2014, they accounted for nearly 15 percent of the recreational market. “Edibles took off immediately in a way we did not anticipate,” says Joe Hodas, chief marketing officer for Dixie Brands. “We had a period of several months where we were always on backorder.” The expansion of the edible market brought with it concerns about food safety and, thus, a tightening of regulations regarding testing for potency, microbials, solvents, heavy metals, and pesticides.

4: Pueblo becomes a cannabis capital. This former steel town is now one of the largest cannabis-growing regions outside of Denver, a surprising fact given that Pueblo’s nearest sizable neighbor (Colorado Springs) banned recreational marijuana stores in 2013. But the warm, dry climate in Pueblo—the first Colorado town to allow outdoor grows—makes it a more viable option for open-air and greenhouse cultivation, both far cheaper than indoor grow operations. Add to that Pueblo’s affordability and a city government that’s actively courting cannabis dollars, and you’ve got an equation that might just add up to Pueblo surpassing Denver as the grow capital of Colorado.

Growth Opportunity

Of the more than 18,000 jobs the Marijuana Policy Group (MPG) estimates the recreational cannabis industry added to Colorado’s economy through 2015, roughly a third have been with companies that never actually touch the plant. Think accountants, attorneys, HVAC installers, and public relations firms. These ancillary businesses contribute, in part, to the MPG’s estimation that cannabis has nearly the same economic impact in Colorado as the federal government. We chart the ever-expanding universe of business sectors cannabis supports.

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Financial Services:

From startup capital to banking services to accountants, the cannabis industry needs moneymen and -women, such as Sundie Seefried, CEO of Safe Harbor Private Banking and Partner Colorado Credit Union, one of the first financial institutions in America to accept cannabis clients. Another example: Dynamic Alternative Finance provides lease financing and loans for everything from equipment to real estate.

Tourism

Events:

The number of out-of-staters reporting that they are more likely to visit Colorado because of marijuana has jumped by 10 percent since 2013, according to the Colorado Tourism Office. Companies like Canna Luxury Tours, which specializes in curated cannabis experiences (e.g., grow-house tours), and event-planning firms, such as Mason Jar Event Group, are banking on that percentage continuing to grow. Marijuana-friendly hotels, such as Cheesman Park’s Adagio Bud & Breakfast, are cropping up to give potheads a place to lay their heads.

Technology:

Colorado’s regulated market is underpinned by technology like Metrc, the radio-frequency identification system that tracks every plant from the time it’s a few inches tall to when it’s sold. Beyond that, there’s a vast market for tech products like point-of-sale and inventory-tracking platforms (see: Denver-based Flowhub) and online ordering and tracking software (like Denver’s Baker). There’s even a kind of Nielsen report for the cannabis industry: Two-year-old BDS Analytics uses point-of-sale data to track consumer spending and trends and help provide predictions and data about the overall market.

Professional Services:

Just like any other business, companies in the world of legal weed need employees. So what does an edible manufacturer do when she needs an extraction expert? She turns to Vangst Talent, a cannabis-specific staffing agency. What about when a cultivation owner needs someone to manage the human resources and benefits aspects of his new endeavor? That’s what Wurk and Faces Human Capital Management are for. Companies looking for help getting off the ground might seek out Canopy Boulder, a business accelerator for cannabis support companies. Influenced by Boulder’s Tech Stars model, Canopy provides seed money and mentoring in exchange for an ownership percentage of many of the ancillary products and service companies that are hoping to help establish infrastructure for the cannabis industry.

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Marketing

Graphic Design:

Given that Colorado’s marijuana advertising restrictions (advertising is not permitted on TV, radio, print, or digital platforms where more than 30 percent of the audience might be under 21) are fairly stringent, pot-preneurs face challenges in spreading the word about their brands. This is especially true because many traditional outlets, like Google and Yahoo (and 5280, for that matter), don’t accept marijuana ads. Firms like Nerve and Verdant, both located in Denver, help cannabis companies with branding and with reaching media outlets.

Legal/Consulting:

Growers, extractors, infusers, and retailers all need help staying compliant with state requirements. Regulators and municipalities need assistance crafting fair and effective regulations. And then there are the sector’s extensive lobbying efforts at both the state and federal levels. That means almost everyone operating in the land of Mary Jane needs a good attorney, like the Hoban Law Group. Established in 2008, the Hoban Law Group focuses exclusively on cannabis. Hoban’s 42 attorneys provide legal and consulting services both to marijuana brands, like Hemp Meds, as well as to municipalities.

Science:

From more accurate plant-testing methods to improved extraction and genetic crossbreeding, we’re betting the number of cannabis-related patent applications is only going to go up. (For example, Denver hardware manufacturer/distributor Organa Brands filed 17 patent applications between 2015 and 2016.) And then there are all of the companies—Mammoth Microbes, Yofumo, Urban-Gro—that specialize in optimizing grows with improved soil nutrients and more effective lighting and hydration setups.

Media:

Nearly every industry has at least one business-to-business publication dedicated to providing insight about market trends, challenges, and lobbying efforts to insiders as well as a consumer publication that breaks it all down for the rest of us. Cannabis isn’t any different: In Denver, we’ve got everything from the Marijuana Business Daily to the Cannabist, a subsidiary of the Denver Post that was featured in the 2015 documentary Rolling Papers about then editor Ricardo Baca.

Rookie Moves: A look at some of the early hurdles and surprises Colorado cannabis companies have faced.

“The biggest mistake a lot of businesses make is not having enough experience in a regulated industry. It’s a lot cheaper starting off your business compliantly than getting fined $100,000. If you don’t have a full-time compliance specialist on your payroll, you will not succeed.”—Kevin GallagherExecutive director, Cannabis Business Alliance

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“The customer base is not always what you think it is. When I first got into this, I thought I was making someone the equivalent of martinis. But with pain, insomnia, PTSD, seizures, epilepsy—a lot of people don’t want to try to get a medical card, so they come through the retail side.”—Charlotte PeytonVice president of business development, Stratos

“When I started my brand, I was pretty much the only company using the Mary Jane’s name. I tried to trademark it, but because I was operating in an industry that the feds did not consider legal, they would not grant me a trademark. Now there are many businesses in the cannabis space with Mary Jane names, causing brand confusion and dilution. If I knew then what I know now, I would probably have chosen a name that does not have anything to do with cannabis.”—Dahlia MertensOwner, Mary Jane’s Medicinals

“I saw so many businesses being undercapitalized and not realizing stuff is going to take longer and cost more than you think.” —Scott JordanDirector of business development, Dynamic Alternative Finance

“I don’t like to call them mistakes—more learning opportunities—but I wish I had built my cultivation sooner.”—Julie BerlinerSweet Grass Kitchen

“One thing we didn’t understand early on was how much information people really need about the safe consumption of edibles. The budtenders are our delivery mechanism for education. Now we’re focused on getting them good-quality information and having our sales reps and brand ambassadors provide training.”—Nancy WhitemanCo-founder and co-owner, Wana Brands

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“What was surprising about the cannabis industry over other industries that our technology serves was the tremendous variation in operational models and their sophistication or lack thereof. We have seen everything from small, highly successful lifestyle grow operations to fully automated operations and everything in between. The impact on us as a company that creates products used on harvested cannabis in the curing and drying phase of production was mostly in how we had to adjust our products to be flexible in a much wider range of cultivation scenarios. This could range from indoor grows in new facilities to grows operating in 80-year-old greenhouses with marginal connectivity. That level of variation has been a tremendous challenge but put in proper perspective, it’s an incredible development opportunity.”—Alfonso CampalansCEO, Yofumo

“I hadn’t fully realized how skewed the market was toward higher dose/lower cost per milligram products. When we were first starting out, we had to convince stores that the largest opportunity existed in offering people the right dose. We knew we were offering a quality microdosed product that justified its price point, so the initial pushback on microdosing was a surprise. The budtenders themselves were higher dose users, and we were taken aback by how many times they would recommend products they liked versus products that would be best for the customer. Once we started telling budtenders and dispensary owners that Stillwater wasn’t for them necessarily, but that it could be a great product for their loved ones who weren’t so experienced, they started to get it. The market now seems to be making a shift toward cannabis as a functional medicine, not just as a means to a high, and that is where we are fitting in.”—Missy Bradley Brand director, Stillwater

Up In Smoke

When Colorado legalized recreational marijuana, Chicken Littles forecasted the Centennial State would descend into crime-riddled, drug-addled chaos, while Pollyannas pooh-poohed the assertions, predicting we’d solve our school-funding crisis with the additional revenue. The truth, as usual, is somewhere in between.

Cannabis is a cash cow for the state.

Last year, the state collected roughly $200 million in cannabis revenue, which sounds like a lot until you consider that the state’s budget is close to $27 billion. That makes the total contribution from cannabis less than one percent. Sales and income tax, by comparison, contribute about $2.6 billionand $7 billion, respectively, followed by our highway fuel tax at more than $611million. That’s not to say cannabis isn’t helping some things. But it’s not a cure-all for statewide underfunding.

If it’s for sale in a shop, it’s totally safe.

Uhhhh, not even the FDA can ensure that every item you purchase at the grocery store is safe (hello, cantaloupe catastrophe of 2011). And the FDA doesn’t do any testing on cannabis, because it’s a federal agency and marijuana is still federally illegal. That task is left to the cities and states where marijuana is legal. Colorado requires growers and manufacturers to test for microbials (such as bacteria and molds), potency, solvents (where appropriate), and pesticides and to submit to annual testing. (The state maintains a list of approved pesticides but has not yet certified any labs for pesticide testing.) Plus, the state executes random sampling tests and does analysis on products that receive credible complaints. The city of Denver also investigates complaints and to date has recalled around 30 products.

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There are more high drivers on the road.

While marijuana-related DUIs remain a small percentage (2.8) of overall impaired driving arrests, the drug appears to be playing a larger role in fatal accidents: Between 2006 and 2014, the number of cases in which at least one driver tested positive for THC went up by more than 150 percent. A closer look in 2016, though, revealed that over 60 percent of drivers involved in fatal accidents who tested positive for marijuana also tested positive for alcohol and/or other drugs. And even though law enforcement agencies have noted that positive tests for weed don’t necessarily mean a driver is high, a recent Denver Post investigation determined that 63 percent of drivers in fatal crashes in 2016 who tested positive for weed were over the legal limit of five nanograms of THC per milliliter of blood.

The kids are all gonna get high.

The Healthy Kids Colorado 2015 Survey showed a one percent increase (from 37 to 38 percent) in the number of high schoolers who have ever used cannabis (that’s down from 43 percent in 2009, by the way). The same bump was reflected in the number of current youth users (those who have used it in the past 30 days)—it went from 20 to 21.2 percent. That said, young people’s perceptions about marijuana are changing. In 2013, 54 percent of high school students viewed regular marijuana use as a risky behavior; in 2015, that had dropped to 48 percent. This has raised concerns from youth advocacy groups like Smart Colorado, which notes that when perceptions of risk decrease, use rates can increase. To that end, the state has set aside close to $12 million for education initiatives in an effort to deter use in those under 21.

Beyond THC: The cannabis plant contains more than 400 compounds, and one of them could soon become a billion-dollar industry.

If all you think about when you hear “marijuana” is THC, you haven’t been paying attention. Although the market for THC-rich plants abounds, another component of the plant has become an industry all its own.

Cannabidiol, or CBD for short, is one of the more than 100 cannabinoids found in the cannabis plant. It’s a nonpsychoactive chemical, which means it won’t get you high, and has been linked anecdotally (and in some international research) to easing seizures, pain, anxiety, and other health issues. In fact, the World Health Organization is currently considering whether CBD should be rescheduled separate from cannabis as a result of this anecdotal evidence.

Consumers seem to have latched onto the substance as a supplement. A recent Hemp Business Journal study estimated that hemp-based CBD products grossed more than $462 million in nationwide sales in 2016 alone, and Colorado holds a particularly interesting connection to the development of this market sector. In 2013, CNN’s Dr. Sanjay Gupta, long a medical marijuana skeptic, profiled a Colorado Springs child named Charlotte Figi, whose life-threatening seizures had been largely stopped seemingly as a result of a Colorado-produced, CBD-rich oil known as Charlotte’s Web. “Before that, I don’t think most of America even knew what CBD was,” says Kevin Gallagher, executive director of the Cannabis Business Alliance.

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The word is definitely out now. Tom Dermody, executive director of the Industrial Hemp Research Foundation, reports that in one study his organization conducted, 23 percent of dispensarygoers went seeking a nonpsychoactive product. Dixie Brands’ chief marketing officer, Joe Hodas, says he sees this firsthand in inventory demands: The Denver company’s top-selling item is its Synergy relief balm, which contains a 1:1 CBD to THC ratio. That’s in line with what Bethany Gomez, director of research for the Brightfield Group, which recently released a market research study about this sector, says she’s seeing too: Major cannabis brands are beginning to develop CBD line extensions in response to consumer demand.

Already, CBD-infused products include everything from coffee to muscle rubs, and some are available online or at local health food stores (see “High-Free Goodies” below). That’s because CBD can be extracted from hemp, which is legal since it has less than 0.3 percent THC in it. And thanks to a recent relaxing of federal regulations—when Congress passed the Agricultural Act of 2014 (also called the Farm Bill), it loosened regulations on the growing of hemp, which had been illegal since 1937—hemp is now being grown in various places throughout the country, including Colorado. In its August report, the Brightfield Group estimated that by 2020, hemp-derived CBD product sales will hit $1 billion.

Here’s a look at the variety of Colorado-born items already available to consumers today:

Anatomy Of A Dispensary

There are about 500 retail marijuana dispensaries in Colorado today, and the Green Solution (TGS) owns 13 of them (with two more stores on the way), making it one of the largest dispensary chains in the state. Established by the Speidell brothers in 2010, TGS also owns two dispensaries in Illinois and one in Florida and hopes to soon have a store in Oregon. These aren’t your typical retail dispensaries (small with much of the product tucked away in the back). Bright, big, and modern, TGS’ newest Denver location on East Colfax Avenue looks more like an Apple Store than a pot shop. We checked in with co-founder Kyle Speidell to learn more about what goes into creating a successful dispensary.

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A: The Speidells’ goal from the beginning was to be in every major Colorado city and to ensure that in the larger ones consumers had access to a TGS location within about five miles. The brothers look for big spaces they can either modify or scrape and rebuild, as they did with their 5,000-square-foot East Colfax dispensary—a ground-up build-out that took nearly two years.

F: TGS maintains a bank of eight register stations, so even if you’re visiting on the busiest day of the year (that would be April 20, naturally), you don’t have to worry about a long wait. Another factor contributing to a speedy checkout: TGS’ point-of-sale software is proprietary. The company has eight developers on its payroll to help create solutions, like the TGS Loyalty Program, to its technology needs. Similar to your King Soopers card, the program tracks your purchases, letting you accrue points to access discounts.

C:If it’s a busy day at TGS, you might be asked to hang out in the waiting area. But most likely you’ll be pointed toward the door to the left (the door to the right leads to an express checkout setup for online orders). After passing a glass display of for-purchase plants and winding past a sampling of cannabis-related tchotchkes, you’ll be paired with a staffer who will walk you through TGS. You’ll start in the hardware section (i.e., vape pens and pipes), then move to the flower and concentrate bar, where more than 50 varietals are featured. From there it’s on to pre-rolled joints, edibles, elixirs, and, finally, transdermal patches and spa products. “We didn’t want it to feel congested,” Speidell notes. “So we created what we call the IKEA flow: We usher you through the space with a one-on-one concierge, but you decide how long you stay at each area.”

D:One of the most unique features about TGS stores is the sheer volume of product on display. Everything TGS has to offer is visible (no budtenders running into the back room to check for stock). In place of glass counters that customers have to lean over, TGS uses custom-built displays to showcase edibles at eye level. The flower and concentrate bar—which has the biggest footprint in the store because it’s the most popular product—is also a bespoke design job. Four display banks oriented at different angles (to give customers some privacy) house flower examples with computer screens denoting the breakdown of every strain—70 percent of which are proprietary to TGS.

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B:Don’t let the “green” in the name fool you: TGS’ Colfax shop is sleek, without a lot of bright colors. “We wanted it to be inviting and modern,” Speidell says. “Nothing says that more than whites and grays.” They also brought in some stone and concrete for a contemporary feel.

C: See above.

Labelology: If you printed out all the regulations governing the packaging and labeling of edibles, you’d end up with a stack of paper an inch thick. We’ll save your eyeballs by highlighting what you need to know.

Standard messaging: Beyond the somewhat obvious warnings about health risks and intoxication effects, the state also requires manufacturers to list all nonorganic pesticides, fungicides, and herbicides applied during cultivation as well as all solvents and chemicals used in creating concentrates. Translation? While the state is doing its best to keep products safe, there are no guarantees.

Childproofing: Per state rules, packages must be child-resistant and contain a statement saying as much. Weed-product packaging also can’t contain the words “candy” or “candies” on it, and the look of the product inside can’t appeal to kids—so cartoon characters or geometric shapes that might reasonably lead little Johnny to think he’s about to swallow a fruit snack aren’t allowed.

The universal symbol: As of October 1, not only is packaging required to carry the universal symbol (no smaller than a quarter of an inch by a quarter of an inch) denoting that a product contains THC, but so does every individual dose.

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Potency: The state requires that packages contain a label showing the breakdown of cannabinoid potency. Generally, that itemization includes the total milligrams of THC, CBD, THC-A, CBD-A, and CBN (cannabinol)—the five most common cannabinoids in marijuana—in the product. If you’re just hoping to get stoned, this might not matter much to you. But if you’re looking at a salve or a patch that claims a 1:1 ratio of THC to CBD, then the milligrams of THC should be equal to (or nearly equal to) the milligrams of CBD on this label.

Serving size and total active THC statement: Every package must include a standard serving size of THC by milligram, plus the total number of serving sizes and total amount of active THC by milligram. Additionally, inside the package, each dose must be scored, marked, or cut. So even if you’re bad at fractions, there’s no excuse for not knowing what the recommended dose is.

What you won’t see: An accepted seal for the certification of organic products. Since the USDA is a federal organization, the cannabis industry can’t access its organic standard. Plus, the standard doesn’t always fit the way cannabis is grown. To address this gap, the Denver- and Oregon-based Cannabis Certification Council (CCC) is crafting an organic standard and symbol for cannabis products, using the USDA’s version as a guide. A fair-labor element that ensures living wages and safe working conditions will be part of the standard, says Ben Gelt, CCC’s current board chair. He expects to have the seal and standard ready for release in early 2018.

Follow The Money

Last year, Colorado collected nearly $200 million in marijuana taxes and fees. After paying for the government agencies required to regulate the industry and giving the required $40 million to the Department of Education’s Building Excellent Schools Today (BEST) program, much of the money goes to the Marijuana Tax Cash Fund (MTCF), which is divvied up among state departments. Here’s a look at some of the projects that money helped fund.

Department of Education2016–’17 MTCF appropriation:$8.5 million
The money CDE received on top of its $40 million for BEST was broken up into grants for things like early literacy initiatives ($4.4 million), school health professionals ($2.3 million), dropout prevention ($900,000), and bullying prevention and education ($900,000). While helpful, pot revenue still only accounted for about one percent of the 2016–’17 CDE budget of $5.4 billion.

$15.3 million: The amount the state has set aside from marijuana tax revenue for affordable housing. The state plans to use the money to create 1,750 new units over the next five years.

Department of Higher Education2016–’17 MTCF appropriation: $900,000
All of the department’s near million-dollar allocation went to establishing and providing research grants at Colorado State University-Pueblo’s Institute
of Cannabis Research. Among the institute’s projects: an investigation into whether industrial hemp could replace wood in the plastic-wood composite used in
3-D printers.

Department of Public Safety2016–’17 MTCF appropriation: $722,000
More than half of the Department of Public Safety’s haul ($400,000) went to fund juvenile alternatives to the formal court system, like the Delta County Juvenile Diversion program, which provides community-based alternatives to youth ages 10 to 17 arrested for misdemeanors or felonies.

$4.5 million

The amount of revenue from marijuana that Denver has put toward affordable housing in the past three years. (The city collects roughly $33 million in pot revenue annually.)

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Department of Transportation2016–’17 MTCF appropriation: $950,000
Half a million went to the state’s First Time Drunk Driving Offender Account, which helps pay for ignition interlock devices when offenders can’t. CDOT also used the funds for campaigns advising folks about the dangers of driving high. Another sizable portion went to a partnership with Lyft called 320, which gave riders deep discounts during 4/20 celebrations this past spring.

Department of Agriculture2016–’17 MTCF appropriation: $3.1 million
The ag department divided its funds between pesticide control and regulation; hemp regulation and seed certification; and Future Farmers of America and 4-H programming through the Colorado State Fair Authority.

Department of Public Health and Environment2016–’17 MTCF appropriation: $18 million
CDPHE got the largest piece of the MTCF pie and put most of it to use in one of two ways: public awareness campaigns ($7 million) and abuse prevention initiatives ($7.1 million) that follow the Communities That Care model. This approach helps communities identify risk factors among children and develop strategies for substance abuse prevention around those factors.

On The Horizon

Assuming things move forward without too much harassment from the feds, here’s what we can expect next in Colorado.

A hemp grow near Springfield, Colorado. Photo by Matthew Staver.

The Market beginning to Level Off
In 2014, total marijuana sales in Colorado were just shy of $700 million. Last year, they notched about $1.3 billion. If sales continue at that clip, Colorado is likely to tip past $1.5 billion this year. Sales will probably slow as the industry matures, though. The Marijuana Policy Group’s Adam Oren notes that part of the initial growth of the market is likely a reflection of consumers moving from the black market to the regulated market. And consider, too, that as more states legalize recreational use, the revenue Colorado gets from marijuana tourism is likely to go down. Wholesale prices are already dropping (from more than $1,800 per pound of flower in July 2016 to about $1,300 this summer), in part because supply—aided by improvements in cultivation and efficiency—is starting to outpace demand.

Consolidation
This has already taken hold in the dispensary scene. A handful of chains hold more than 15 percent of all retail marijuana licenses in the state, among them the Green Solution (16), Native Roots (16), Green Dragon (12), and Sweet Leaf (11). “That’s typical for a new industry,” says Nancy Whiteman, co-founder of infused products company Wana Brands. “Less skillful people will exit, and the people who are left will start looking for efficiencies.” As this happens, smaller companies will likely look to differentiate themselves. For example, while L’Eagle holds a single dispensary license, the retail store appeals to environmentally conscious customers because of its focus on sustainability.

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Microdosing
A standard edible dose contains 10 milligrams of THC. But just as a glass of wine doesn’t affect everyone the same way, 10 milligrams can have dramatically different results from person to person. As consumers have played Goldilocks with their chocolate bars and gummies, an interesting trend toward lower single doses has emerged. Dixie Brands’ Relaxing and Synergy mints (five milligrams of THC per serving) are among its top sellers, and Sweet Grass Kitchen owner Julie Berliner says she’s been making candy with 2.5-milligram doses for more than a year based on customer requests.

More Hemp
While the growth of hemp and CBD as food and health supplements is substantial, it doesn’t begin to touch the opportunity for industrial hemp, according to Tom Dermody of the Denver-based Industrial Hemp Research Foundation (IHRF). Industrial hemp can be used as a textile for clothing and building materials, and last year national sales in those two sectors hit $225 million. In fact, part of the intent of the 2014 Farm Bill, which allowed states to begin growing hemp, was to assess the viability of the crop as an agricultural commodity. Several projects are already underway to do just that. Colorado currently boasts roughly 4,500 acres of seed- and fiber-grade hemp. Next year IHRF will grow an additional 7,000, in part to study the impact of pollen transfer (a concern as outdoor grows become more common).

The Cannabis Clock: Tracking the past half decade of pot in Colorado.

May 28, 2013Governor John Hickenlooper signs legislation that establishes the regulated marijuana market, including laws related topurchase limits (one ounce for an in-state resident), driving under the influence of drugs (five nanograms of active THC per milliliter of blood), and taxation (initially, these taxes total 25 percent).

July 23, 2013By a vote of 5-4, the Colorado Springs City Council bans the establishment of recreational marijuana dispensaries in city limits. Manitou Springs, just beyond the town’s borders, does not.

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November 21, 2013The Drug Enforcement Agency raids more than a dozen dispensaries and homes linked to Denver’s VIP Dispensary; it’s one of the biggest federal actions taken against Colorado marijuana businesses in recent years.

January 1, 2014The first recreational marijuana stores open for business in Colorado. Sales from the day top $1 million.

April 14, 2014Richard Kirk kills his wife in their Observatory Park home.
He later claims marijuana intoxication from edibles led him to commit the crime. After pleading guilty to second-degree murder, he is sentenced to 30 years
in prison in April 2017.

June 3, 2014New York Times columnist Maureen Dowd pens an opinion column detailing her bad experience after eating a marijuana-infused chocolate bar in Colorado. Turns out, she had consumed more than the suggested dose.

July 1, 2014The state begins accepting applications for retail licenses from those who were not previously licensed as medical dispensaries. (Only existing medical dispensaries were allowed to apply for the first retail licenses.)

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October 1, 2014Colorado removes the requirement that dispensaries be “vertically integrated,” meaning they must grow at least 70 percent of what they sell.

December 18, 2014Nebraska and Oklahoma sue Colorado over marijuana, suggesting the state’s legalization has increased drug trafficking in their states. In 2016, the Supreme Court declines to hear the case.

February 19, 2015The anti-legalization group Safe Streets Alliance files a federal lawsuit on behalf of the Holiday Inn in Frisco against the state of Colorado, asserting that the medical dispensary located across the street from the hotel led to business losses.

April 19, 2015CNN airs High Profits, an eight-episode documentary following a Colorado couple looking to make it big in the marijuana business. It lasts one season.

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May 12, 2015The Colorado state Legislature loosens the restriction on out-of-state investors in marijuana companies.

December 31, 2015Colorado closes out 2015 with more than $996 million in total marijuana sales.June 30, 2016Disgraced American cycling star and Colorado resident Floyd Landis launches a line of cannabis products (edibles, lotions, and vape cartridges) under the brand Floyd’s of Leadville.

July 8, 2016Backers of Amendment 139, which would prohibit the sale of marijuana products with potency levels above 16 percent, withdraw the proposed amendment, blaming the marijuana industry for making it “too expensive to move forward.”

September 19, 2016Denver dispensary L’Eagle becomes the first marijuana retail outlet to earn the city’s Certifiably Green designation, a certification for environmental sustainability.

November 15, 2016Denver voters pass Proposition 300, allowing for social use of pot at licensed businesses.

April 12, 2017LivWell Enlightened Health wins the Xcel Energy 2016 Lighting Efficiency Achievement Award for attaining the highest energy savings in a single lighting project in Colorado in 2016. (A 5,000-square-foot indoor marijuana facility uses an average of 41,808 kilowatt-hours monthly—roughly 66 times what a household uses, on average.)

April 20, 2017The International Church of Cannabis opens at 400 South Logan Street, where parishioners “use the sacred flower to reveal the best version of self, discover a creative voice, and enrich their community with the fruits of that creativity.” Um, OK. Sure.

June 28, 2017More than 60 people in the Denver area are indicted on federal charges associated with illegal marijuana activity in one of the biggest busts in Colorado since 2014.

August 4, 2017Aspen Canyon Ranch hosts the first annual High Country Cup, a celebration of Colorado’s best marijuana, beer, and wine.

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October 1, 2017New state packaging regulations, which require that the universal symbol denoting something containing THC is placed on every edible dose, go into effect.